Tax Strategies for S Corporations in Financial Distress

Mastering Complex S Corp Regulations to Protect Your Tax Position

Recording of a 100-minute CPE webinar with Q&A

Conducted on Wednesday, July 29, 2009

Course Materials

This seminar will explore the details of federal tax regulations relevant to S corps either under financial distress or booking losses. The panel will offer practical solutions for adjusting tax compliance and planning to weather the current economic crisis.


The differences in federal tax rules for S corporations, as compared to C corps and other entities, can be complex enough under normal circumstances. Today's global financial crisis requires that tax advisors and professionals master the intricacies of the IRS regulations for S corps.

Federal code sections relating to cancellation of debt income, restructuring and reorganization, and stock transactions demand the attention of professionals responsible for tax planning and compliance for S corps, their parents and their shareholders.

Depending on the structure and financial health of the S corp, the regulations can either offer relief under the code or create pitfalls to avoid. Tax advisors and executives must also understand the new provisions in the 2009 stimulus legislation to take full advantage of potential tax benefits.

Listen as our panel of tax and accounting professionals analyzes the federal regulations governing COD income, Sect. 368 reorganizations, and stock transactions most relevant to S corp tax departments and their advisors during the financial crisis.



  1. Cancellation of debt income issues for S Corps
    1. Types of transactions that create COD income
    2. Types of transactions that are excluded under COD income
    3. Possible reduction in NOLs, other credits
  2. Restructuring and reorganization strategies for distressed S Corps
    1. Sect. 368 reorganizations
      1. E reorganizations
      2. G reorganizations
    2. Converting S Corps in parent Q-sub groups
    3. Troubled debt restructuring tax implications
  3. Tax impact of stock and ownership changes
    1. Types of transactions that can inadvertently trigger change of ownership, termination of subchapter S election
    2. Impact of various stock transactions
  4. Recent changes to laws and regs governing S Corps
    1. American Recovery and Reinvestment Act of 2009 provisions reducing recognition period for built-in gains on S Corps
    2. T.D. 9422 on shareholder rules, PCBs, ESTBs
    3. REG-102822-08 proposed COD income changes


The panel will help you navigate complex tax rules for S corporations by:

  • Analyzing IRC Sect. 108 rules for S corps that recognize cancellation of debt income.
  • Evaluating the various restructuring options under Sect. 368.
  • Detailing the tax impacts of stock acquisitions, distributions and ownership changes.
  • Breaking down recent regulatory changes for S corp taxation, including provisions from the 2009 stimulus bill.


Laura Howell-Smith
Laura Howell-Smith

Deloitte & Touche

She specializes in transactional and compliance issues regarding S corporations, trusts and estates. She has more than...  |  Read More

Jeanne Sullivan
Jeanne Sullivan
Senior Manager, National Tax Pass-Throughs Group

She joined KPMG in 2006 after eight years with the IRS, working with pass-throughs and special industries as a senior...  |  Read More

C. Wells Hall, III
C. Wells Hall, III

Mayer Brown

He specializes in advising clients on the tax implications of acquisitions, reorganizations, restructuring of business...  |  Read More

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